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Russia vulnerable as oil prices hit nine-month low on IEA 'glut' warnings

A worker of Gujarat State Petroleum Corporation checks oil flow of well PK-2 during its inauguration at Ingoli village, about 40 kilometers (25 miles) southwest of Ahmadabad, India Oil prices have fallen to a nine-month low as surging supply from Opec and the US floods the market and fresh demand wilts, leading to an “oil glut” in the Atlantic region despite the twin crises in Iraq and Russia. The International Energy Agency (IEA) cut its forecast for the rise in global consumption to just 1m barrels a day (b/d) this year due to near recession conditions in Europe and as pervasive weakness in the world economy disappoints. This comes as supply rises by a further 300,000 b/d beyond what was already planned. The warning sent Brent crude prices tumbling to $104 a barrel, the lowest this year. The sudden shift in the balance of the market has allowed the […]

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Gazprom Neft posts strong profits

The oil arm of Russian gas company Gazprom said Tuesday it made $2.4 billion in net profits in the first half of the year, up 13 percent from 2013. Gazprom Neft released its report for the first half of the year. On top of a boost in net profits, the company said an increase in hydrocarbon production helped drive sales up 13.9 percent year-on-year. "Hydrocarbon production volumes in the first half of the year increased 4.1 percent year-on-year to 234.18 million barrels of oil equivalent," the company said in a statement. The company last month announced a subsidiary started drilling into the arctic Dolginskoye field , where it estimates reserves at more than 200 million tons of oil equivalent. It June, the company started preliminary oil production from the Badra oil field in Iraq, which has estimated reserves of 3 billion barrels of oil. The U.S. Energy Information Administration, […]

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Exxon Drilling Russian Arctic Shows Sanction Lack Bite

Sanctions, what sanctions? Exxon Mobil Corp. will start drilling a $700 million well in the Arctic Ocean tomorrow, Russia’s government said, showing that for all the talk of action against Vladimir Putin ’s oil industry, the largest U.S. energy company is undeterred. As Russia’s relations with Europe and the U.S. deteriorated to the lowest point since the Cold war over the conflict in Ukraine, the European Union imposed a third round of sanctions last week, restricting the export of equipment used for offshore oil production. That doesn’t affect Exxon’s plans because the contract to hire the rig was signed before the measures were announced. Developing the Arctic is vital for Russia, where energy provides half the state’s revenue, to maintain oil production near a post-Soviet high of more than 10 million barrels a day. For Exxon, where output fell to a five-year low in the second quarter, a discovery […]

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Three Reasons Why Europeans Aren’t Too Worried About Putin’s Energy Power

Has a tit-for-tat spiral begun? After Europe launched tougher sanctions against Russia at the end of July, Russian President Vladimir Putin this week banned food imports from Europe . Some fear this might only be the beginning of a long-term Russian retaliation. Putin eventually could cut energy exports. Many Europeans would then suffer a hard winter. That’s at least the theory. In practice, Europeans—and in particular Germans—aren’t too worried about Putin’s unquestionable energy power. Why? Here are three reasons: 1. Stopping energy exports would severely damage the Russian economy and destabilize Putin’s power. In 2012, the country exported almost $300 billion in oil and gas . These products accounted for about two-thirds of all Russian exports. The country needs the money. Half of the government’s budget depends on income from energy exports. Putin spends the money for everything from maintaining social welfare to keeping up its military […]

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Petrodollar Under Threat As Russia And Iran Sign Historic 500,000 Barrel A Day Oil Deal

Russia Delivers Blow To Petrodollar In Historic $20 Billion Iran Oil Deal Russia signed a historic $20 billion oil deal with Iran to bypass both western sanctions and the dollar based western monetary system yesterday. President Putin Admire Gold Bar (London Gold Delivery Bar) Currency wars are set to escalate as the petro dollar’s decline continues.   Russian Energy Minister Alexander Novak and his Iranian counterpart Bijan Zanganeh signed a five-year memorandum of understanding in Moscow, which included cooperation in the oil sector. "Based on Iran’s proposal, we will participate in arranging shipments of crude oil, including to the Russian market," Novak was quoted as saying. The five year accord will see Russia help Iran “organise oil sales” as well as “cooperate in the oil-gas industry, construction of power plants, grids, supply of machinery, consumer goods and agriculture products”, according to a statement by the Energy Ministry in Moscow. […]

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Russian consumers prepared to swallow food ban

Less than 24 hours after Vladimir Putin issued а blanket ban on western meat, dairy and other produce, Dmitry Kornilov, a well-heeled Moscow shopper, had one thing to say to the Russian president: keep up the good work. Never mind that Mr Kornilov, an economist, shops at one of the capital’s most expensive, import-laden grocery stores, travels regularly to the US and was picking up a bottle of French white on his way to getting a manicure. Like many in Russia, he believes Mr Putin was right to respond to three rounds of serious western sanctions . “If someone comes up to the street and insults you not once, not twice but three times, the third time you’re going to answer back,” Mr Kornilev said. “Pride is not just in a person, it is in a nation.” Over the past six months, Mr Putin’s popularity has risen in line […]

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Russia Favorite With Banks to Energy Unless Sanctions Hit

Some of the most lucrative banks and energy companies in the world are also among the cheapest. What’s the catch? They are Russian. While OAO Novatek has the best return on equity and assets among the 100 largest energy companies and OAO Sberbank has the second-highest net interest margin among lenders, deepening international sanctions against Russia are turning investors away. The two stocks have lost about $23 billion in combined market value in the past six weeks, leaving both at discounts of more than 40 percent to their industry rivals, as they became targets of the measures aimed at punishing Russia for its support of Ukrainian rebels. Look beyond Novatek in the energy industry and the findings are similar. Six of the biggest Russian oil and gas companies, including OAO Lukoil, OAO Bashneft and OAO Rosneft, have an average return on equity of 18.8 percent, almost four times the […]

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Russia: U.S. ruined Iranian oil deal

An official inside the Kremlin said Wednesday the U.S. government got in the way of a possible deal between Iranian and Russian oil companies. Iran can export around 1 million bpd under the terms of a November arrangement that brought some relief from economic sanctions in exchange for a commitment to curb nuclear research activity. In the wake of the agreement, Iran said it was in serious negotiations with the Russian government to swap oil for goods. Both sides already cooperate in the energy sector, with Russia supplying fuel for Iran’s nuclear reactor in Bushehr. A source inside in the Russian government told Russian business daily newspaper Kommersant the U.S. government "attempted to torpedo the [oil] deal by threatening both Russian and Iranian companies with sanctions." When the deal surfaced early this year, U.S. Rep. Ed Royce, R-Calif., chairman of the House Committee on Foreign Affairs, said it was […]

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Russia hits back at sanctions with food ban

Russian president Vladimir Putin Russian president Vladimir Putin Russia banned imports of all meat, fish, seafood, vegetables, fruit, milk, dairy products and a wide range of processed foods from the US, the EU, Australia, Canada and Norway for a year on Thursday, in a massive retaliation against western sanctions over its role in the Ukraine crisis . The government also threatened more counter-sanctions. Prime minister Dmitry Medvedev confirmed that the cabinet was discussing a proposal to ban European and American Airlines from flying over Russian airspace en route to Asia. He added that Moscow was also “potentially ready” to introduce protective measures in a number of industrial sectors including the automobile industry, shipbuilding and aircraft production. More On this topic IN Europe Moscow’s harsh move comes as tension over Ukraine is again spiking, with Nato warning of a renewed Russian troop build-up on its border with Ukraine and some […]

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Lukoil dumps assets in Central Europe

Russian energy company Lukoil said it sold off its service stations in Hungary, the Czech Republic and the Slovak Republic as part of an optimization strategy. Hungarian energy company MOL acquired 44 retail service centers from Lukoil. It builds on a similar acquisition in the country from Italian energy company Eni, giving it 319 service stations in the Czech Republic. Rival company Norm Benzinkut purchased 75 filling stations in Hungary and 19 in Slovakia. The Russian energy company said the sales were part of an effort to streamline its asset base in Central Europe. "The decision to sell the assets was taken as part of the effort to optimize LUKOIL’s business in petroleum-product marketing," the company said in a statement Monday. Lukoil last week made a similar move with its network of filling stations in Ukraine. Lukoil was spared from the latest round of U.S. and European sanctions targeting […]

Posted On : Published By : Tom Whipple